Ms Georgia Bedworth (instructed by Charles Russell Speechlys of One London Square, Guildford, Surrey, GU1 1UN) for the three minor Defendants and also for the minor Defendant who has now attained majority and also for the unborns.

(1) an order under CPR 5.4C(4) prohibiting a non-party to this Action from exercising any rights under the general rule (as contained in CPR 5.4C(1)) to obtain copies of statements of case, judgments or orders. Such order does not, for the avoidance of doubt, extend to this judgment. But it does extend to the second and confidential judgment which I will hand down at the same time as this judgment. Such order also extends to any order made as a result of either (1) this judgment or (2) my confidential judgment; and

(2) an order under CPR 5.4B(1) prohibiting any party to these proceedings from obtaining from the records of the court, without the leave of the court, a copy of any skeleton argument, witness statement or exhibit thereto or any other document falling within the ambit of paragraph 4.2A of Practice Direction 5A, which has been exchanged confidentially as between (1) the Claimant and (2) those of the Defendants who are minors. This order, obviously, does not affect either the Claimant or the Defendants who remain minors. But I intend it to apply as from when they attain the age of 18. Further, I intend to order that my confidential judgment should not be made available to the Thirteenth Defendant (who has now attained majority) personally.

Indirectly, through a chain of shareholdings, the Trust owns 100% of the "A" shares in A Limited. A Limited is a company incorporated under the laws of Guernsey. In turn A Limited owns 100% of the shareholding in B Limited, a company incorporated under the laws of the British Virgin Islands. Together A Limited and B Limited own a substantial portfolio of residential properties which are let out to tenants. There appear to be 221 properties, of which 208 are in Town A and 13 are in Town B. Town A and Town B are some distance from one another. The vast bulk of these properties are owned by A Limited. Only 14 of the properties are owned by B Limited and those 14 properties are situated in Town A. They form part of the larger estate which A Limited owns in Town A.

(1) as to what it should direct A Limited and B Limited to do in response to C Limited's claim against A Limited and B Limited. The directors of A Limited and B Limited are a Ms Diana Brush and Mr Marc Angst. Ms Brush is a Senior Trust Manager employed by the Trustee. Mr Angst is the Managing Director of, and 50% shareholder in, the Trustee. In her evidence, Ms Brush accepts that the Trust, through its shareholding, controls the activities of A Limited and B Limited;

(2) whether there should be a Mediation of C Limited's claims against A Limited and B Limited;

(3) if so, what should be the parameters for the stance to be adopted by A Limited and B Limited in any such Mediation;

(4) as to how (1) the costs of A and B Limited in defending C Limited's claims, (2) any potential liability of A Limited and B Limited for C Limited's costs and damages and (3) the costs of and incidental to this Action, should be apportioned as between capital and income.

All the Defendants are members of different generations of the Settlor's family. There are deep divisions within the Defendants both as to the merits of C Limited's claims and as to how any necessary monies to dispose of those claims (including the costs of this Action seeking directions) should be borne as between the capital and income of the Trust.

Each of Ms McDonnell (for the Trustee) and Mr Scrivener (for the First Defendant) urge upon me that I should regard the properties in the portfolio as if they were assets of the Trust. Mr Scrivener put it most strongly. His words were that the properties in the portfolio are the assets of the Trust and it would be artificial to say anything else. He and Ms McDonnell rely primarily in support of that proposition on what they say is the true meaning of the judgment of Deemster Kerruish in the High Court of the Isle of Man in Poyiadjis [2004] WTLR 1169. Ms Bedworth, for the minors and also the unborns, now argues strongly against this. Ms Bedworth's position has, I think, developed as time has gone on. That is no criticism of her because all counsel's positions became somewhat fluid in response to challenges which I put before them. That is why I ordered two rounds of written submissions (original and responsive) following conclusion of the oral hearing before me. The issues raised in this Action are challenging and it is not surprising that all counsel needed to develop their positions as a result of the forensic process (including my interventions).

However, I say at this early stage that if (and it is a big if) Deemster Kerruish did in Poyiadjis decide what Ms McDonnell and Mr Scrivener say he did, then the Deemster was, in my judgment, wrong to do so and I am not prepared to follow his decision.

The hearing before me also raised issues as to the manner of its conduct. I chose to conduct the hearing in private and to make an order excluding, sequentially, various of the Defendants from the hearing in respect of certain specific issues. Practice Direction 64B relates to applications to the court for directions by a trustee in relation to the administration of a trust. Paragraph 3 of that Practice Direction provides that the proceedings will, in the first instance, be listed in private. Obviously, the important words are "in the first instance". At the commencement of the hearing before me I sought submissions as to whether the hearing should continue in private. No-one argued for a public hearing. Accordingly, I continued in private but subsequently sought submissions as to whether this judgment should be given in public.

(1) each of the Settlor's four children was entitled to the income of their respective one quarter share in the Trust Fund for life, with a life interest thereafter in favour of the child's surviving spouse. The present life tenants are the Fourth Defendant (the widow of Child 1), the Third Defendant (the widow of Child 2), the First Defendant and the Second Defendant. The First Defendant presently has no spouse. Should the Second Defendant predecease his spouse then she will become entitled to a life interest in the Second Defendant's quarter share in the Trust Fund;

(2) neither Child 1 nor the First Defendant had any children. Accordingly, under the terms of the Deed of Appointment of 28 March 1979, following their deaths the capital of their respective shares in the Trust Fund will be held on trust for such of the Fifth, Sixth, Seventh and Eighth Defendants as are living at the date of death of the last of the Settlor's four children to die, and if more than one in equal shares absolutely (clause 4 of the Deed of Appointment of 28 March 1979). Quite how, granted the structure of the Trust which I discuss below, whichever of the Fifth, Sixth, Seventh and Eighth Defendants acquire an absolute interest in capital are actually going to receive that capital must be a matter of speculation. I do not know whether this has been addressed. If it has been addressed, it is not reflected in the evidence before me.

The devolution of Child 2's share (where his widow the Third Defendant presently has a life interest) and the Second Defendant's share (where his wife may have a life interest if she survives him) is governed by the two Deeds of Appointment of 31 December 1982. These Deeds are in identical terms. In the case of the Second Defendant's share then, following the death of the survivor of the Second Defendant and his wife, his share will be held on trust to pay the income to their two children (the Seventh Defendant and the Eighth Defendant) for life, and then after the death of the first of the Seventh and Eighth Defendants to die, to pay the income to the survivor for life with remainder (as to both capital and income) "upon trust for all such one or more of the children or remoter issue of the [Seventh Defendant] and [Eighth Defendant] born within the perpetuity period as defined by the said Appointment of the 28 March 1979 as shall attain the age of Twenty One Years or marry under that age and if more than one in equal shares". The definition of "the perpetuity period" as contained in the Deed of Appointment of 28 March 1979 is not without its difficulties. But, before me, it seemed to be common ground that the perpetuity period ended on 5 November 2033. It would seem that the Eleventh Defendant and the Twelfth Defendant (two of three children of the Seventh Defendant) have already acquired vested remainders. The Thirteenth, Fourteenth and Fifteenth Defendants, granted their age, presently have contingent remainders. Clearly there is the realistic possibility of unborns acquiring contingent, and then vested, remainders in the capital and income of the Second Defendant's shares.

By Order of Master Matthews made in this Action on 28 July 2016 a Mr Duncan Elson, a solicitor with Charles Russell Speechlys, was appointed as litigation friend for the Thirteenth to SixteenthDefendants and to represent the interests of the unborn beneficiaries of the Trust. The Master provided that Mr Elson's costs should be assessed on the indemnity basis (if not agreed) and paid out of the Trust Fund. I have before me evidence from Mr Elson. I am more than satisfied from that evidence that he has carefully considered the position of all of those whom he represents. For these purposes has taken the advice of Ms Bedworth. Ms Bedworth's submissions to me reflect her Advice which Mr Elson has accepted.

In that subsequent paragraph Ms Brush indicates that some further re-structuring took place in 1991, on the advice of leading counsel, Robert Venables QC, with the aim of diversion of future growth in the assets of the Trust into new family trusts so as to minimise inheritance tax liability on the death of the Selected Beneficiaries. She says that, as part of that exercise, new "B" shares were created in A Limited. The existing "A" shares, which continued to be assets of the Trust, were entitled to all of the dividend income and a maximum capital value (in the event of sale or liquidation) of £10m. The new "B" shares were entitled only to any capital value in excess of £10m, and were entitled to require that A Limited be liquidated instead of sold. The new "B" shares in A Limited were allotted to the trustees of new discretionary trusts settled by each of the four children of the Settlor.

The Articles of Association of A Limited were not placed before me. It is, I suppose, quite possible that only the "A" shares confer voting rights in A Limited and so, in that sense, control of A Limited lies entirely with the "A" shares. But, even in these circumstances, it would be wrong to describe the Trust as the ultimate owner of the whole of A Limited. To the extent that A Limited's capital value exceeds £10m then that excess would seem to be attributable only to the value of the "B" shares. Although there is no formal valuation of the property portfolio before me (and nor need there have been) the evidence suggests that the combined total valuation of the whole property portfolio as held by A Limited and B Limited is in the region of £30m. So, on Ms Brush's evidence, the "B" shares are very much of relevance. The directors of A Limited (in fulfilling whatever are their duties under the law of Guernsey) will no doubt wish to bear in mind that their activities affect not only the "A" Shares but also the "B" Shares.

(1) that the costs and damages associated with C Limited's claims against A Limited and B Limited are liabilities of A Limited and B Limited and not of the Trust. No one is suing the Trust as such;

(2) that A Limited and B Limited are separate legal entities from the Trust with their own individual legal personalities. No one had argued before me that A Limited and B Limited held the property portfolio on bare trust for the Trustee; no one had argued before me that there were any grounds or basis for piercing the corporate veil under the principles set out in Prest v.Petrodel Resources Limited[2013] 2 AC 415; accordingly

(3) the Structure must take effect according to its terms. This meant that the property portfolio, itself, was not an asset of the Trust. The property portfolio was merely an asset of the two companies in which directly, or indirectly, the Trust was the shareholder,

In Poyiadjis there were two trusts (the Atlas Trust and the Trident Trust), established for the benefit of Mr Poyiadjis and his family. The assets of the two Trusts consisted of the entire share capital of two companies incorporated in the British Virgin Islands. Those companies had bank accounts in the Isle of Man holding $39m odd and $128m odd respectively. The directors of the companies were also the trustees of the Atlas Trust and the Trident Trust. In October 2001 the Isle of Man Court made an order, pursuant to section 7 of the Criminal Justice Act 1990, restraining the removal or other disposal of Mr Poyiadjis' assets from the jurisdiction. That restraint order specifically referred to the monies held in the two bank accounts. It was alleged that the monies held in the two bank accounts were the proceeds of a securities fraud committed in the USA by Mr Poyiadjis. The US Department of Justice commenced in rem proceedings claiming the monies subject to the restraint order. This resulted in a default judgment being given by a US court. Criminal proceedings and an action by the Securities and Exchange Commission were also begun against Mr Poyiadjis, and freezing and repatriation orders were made by the US courts. By a petition to the Isle of Man courts the trustees and beneficiaries of the Atlas Trust and the Trident Trust, as well as the two companies, sought permission to use the funds that were subject to the restraint order to finance defences against the US Proceedings. US law provided that assets subject to the orders of the US Courts could not be utilised for legal costs.

"[30] Whilst I accept that in law the bank accounts are corporate and not strictly trust assets, in the circumstances of this case, I find that the interposition of a limited company does not in any material way qualify the trustees' interest in the relevant bank accounts. It does not make a difference to the duties and responsibilities of the trustees, including responsibilities to persons, who have or may have an interest in the trust assets, whether held directly by the trustees or through a company.

[31] Further in the circumstances of this case, the directors, when exercising their powers - including deciding what, if any, action to take relevant to the order, the bank accounts, or the in rem proceedings - cannot divest themselves of the knowledge and information obtained in their capacity as trustees, and therefore must act at all times mindful of their duties and responsibilities to persons, who have or, may have an interest in the trust assets.

[32] I therefore consider that to treat the companies as bodies independent of the trustees qua trustees, and to treat the latter as shareholders, would be to ignore the reality of the situation. I further consider that, bearing in mind the terms of the order, and the circumstances which gave rise to it, the bank accounts ought to be considered not only as corporate assets, but also as trust assets. Accordingly, I do not consider that I need to address Mr Farrer's alternative submissions on the piercing of the corporate veil."

For my part, it seems to me that what the Deemster was saying in paragraphs [30] to [32] was directed to the specific circumstances of that particular case. I do not detect the Deemster identifying and applying any independent principle of law, applicable to all cases, that the Structure which the parties have chosen to put in place can be ignored and that the court is perfectly free to treat corporate assets as trust assets by ignoring the interposition of limited companies.

(2) as it seems to me the whole reasoning in Bartlett negates the proposition that the Structure in this case can be collapsed, as a matter of law, in manner suggested by Ms McDonnell and Mr Scrivener. As Brightman J said at 532B:-

"If the trust had existed without the incorporation of BTL, so that the bank held the freehold and leasehold properties and other assets of BTL directly upon the trusts of the settlement, it would in my opinion have been a clear breach of trust for the bank to have hazarded trust money upon the Old Bailey Development project in partnership with Stock Conversion."

But Brightman J did not then seek to address matters by collapsing the Structure so as to treat the bank as having held the freehold and leasehold properties directly upon the trusts of the settlement. On the contrary, he turned to the question as to what was the duty of the bank as the holder only of the shares in the two companies.

But, of course, the directors of A Limited and B Limited will, in all probabilities, owe duties to their respective companies to act in the best interests of those companies. Whilst I do not know what is the law of Guernsey or the British Virgin Islands in this regard it does not seem unreasonable to presuppose that there may well be such duties in both jurisdictions. The directors in fulfilling such duties would, no doubt, take the Trustee's instructions into account. But they might then make a bona fide commercial decision not to follow the instructions to the letter. In these circumstances, as it seems to me, the Trustee could arguably be blamed for not removing the directors for more complaint ones only if fulfilling the instructions were lawfully under the laws of Guernsey and the British Virgin Islands respectively. In other words, intervention to obtain more compliant directors is perfectly permissible, and may be necessary under the Bartlett duty, in respect of a bona fide commercial decision which is unattractive to the Trustee. But it cannot be a breach of the Bartlett duty, in my judgment, to require intervention so as to force the directors, or the new directors, to achieve something which is unlawful under the laws of Guernsey and the British Virgin Islands.

I note that the conclusion I have reached appears to be in accordance with the views expressed in Lewin on Trusts 19th Edition at para 27-246 where under the heading "Litigation by or against companies owned by a trust" it is suggested that it may be appropriate for an application for directions to be made by the share owning trustees because questions may arise how, if at all, the trustees should in the interests of the beneficiaries exercise their powers and rights as shareholders to intervene in the management of the affairs of the company in regard to the litigation "under the relevant principles considered elsewhere". ("Relevant principles considered elsewhere" is a reference to the principles in Bartlett).

In 1996 Chesterton Plc produced a Report on the property portfolio. As a result a 12 year modernisation plan was commenced with a view to upgrading the property portfolio. What happened was that C Limited received the gross rental income from the property portfolio as managing agents. A certain portion of that gross rental income was earmarked for ordinary maintenance works with, it is said, a further 35% of that gross rental income being utilised for renovation and improvement works under the modernisation plan. This arrangement, it is said, adversely affected the life tenants under the Trust (albeit with their consent through C Limited) in that the monies used to fund the modernisation plan did not become available, up the chain, to pay income to them under the terms of the Trust. Rather such renovation and improvement works went to improve the capital value of the property portfolio.

(1) the First Defendant clearly thinks that the present claims of C Limited are fully justified and that they should be borne by capital; but

(2) the Second Defendant and the husband of the Seventh Defendant (as 50% shareholders of C Limited) do not support the claims which C Limited is now bringing (but, of course, they can do nothing about it because they are not directors of C Limited). They do not wish to see capital being used to fund any resolution.

(1) a reimbursement claim against A Limited in the total sum of £184,298,16 and a reimbursement claim against B Limited in the total sum of £22,807.03. These claims had been the subject matter of the 2009 Invoices and were broken down into various parts, such as "Thermogenesis and Newlite repair costs", other repairs, structural works, woodworm treatment, works to doors and windows, works to gardens and fences and off-street parking works;

(2) a claim against each of A Limited and B Limited for wrongful termination of the management agreements. It is said by C Limited that 12 months' notice should have been given, resulting in a claim for £164,712.53 against A Limited and £11,402.48 against B Limited;

(3) a claim for consequential loss which consisted entirely of legal fees in the sum of £80,760.21; and

(4) a claim for interest on all the above sums at the rate of 8% per annum.

The total value of C Limited's present claims (assuming interest at 8%) is £663,904. This is after giving credit for rental deposits, the property of A Limited and B Limited, which C Limited has throughout continued to hold. C Limited has admitted that A Limited and B Limited are entitled to credit for these rental deposits. On the basis of the present costs budgets for a contested trial (and, I stress, those costs budgets have yet to be approved) the total downside for A Limited and B Limited together, assuming the entirety of C Limited's claim succeeded at trial and interest was awarded at 8%, would be some £1,153,461 (this includes the costs of A Limited and B Limited).

However, the most major creditor of C Limited is the First Defendant (with, perhaps, Child 2 or his estate being the other major creditor). The First Defendant's evidence is that C Limited does not have external creditors (such as trade creditors or HMRC). She, and to a lesser extent Child 2, loaned monies to C Limited to enable it to pay all its external debts (including the costs orders in the possession proceedings). So any recovery in the 2015 Action by C Limited will enure primarily for the benefit of the First Defendant because it will enable C Limited to repay monies which C Limited owes to the First Defendant. The converse side of the coin, of course, is that this means that if C Limited is to fund the Action through to trial then the only realistic source of funding is the First Defendant (an elderly lady aged 83). Equally, the First Defendant may put herself at risk of a costs order being made against her personally as a result of her funding of C Limited's claims.

I would caution the First Defendant, however, from thinking that, as a result of my conclusion above that the property portfolio is not an asset of the Trust, my confidential judgment will have no meaningful effect on what can be obtained from A Limited and B Limited at any Mediation. I shall formulate my confidential judgment by reference to the Bartlett duty but the Trustee, and hence indirectly the directors of A Limited and B Limited, are likely, in practicality, to follow what I have to say to the letter.

I also referred above to various exclusion orders which I made when submissions came to deal with settlement parameters and the future conduct of the 2015 Action. In so doing acted in accordance with the principles set out in Re Moritz. Deceased [1960] 1 Ch. 251 and Re Eaton.Deceased [1964] 1 WLR 1269. As Wynn-Parry J said in Re Moritz at 255:-

"As I understand it, the practice in the [Chancery Division] is that where a trustee finds it is compelled to ask for the directions of the court as to whether or not certain proceedings should be taken, while it is proper and indeed necessary to join the parties against whom the proposed relief is sought, those parties should not be present in Chambers when the matter is debated; and they should not be furnished with the evidence upon which the court is asked to act."

As it seemed to me, granted the disparity of views within the Settlor's extended family, it was necessary to make the exclusion orders which I did in order to preserve confidentiality in the perceived merits of the 2015 Action. And that is why it seems to me to be necessary to deliver a second but confidential judgment on issues relating to settlement parameters (and the future conduct of the 2015 Action should settlement prove impossible at Medication).

(1) the costs associated with, and the sums needed to dispose of, the 2015 Action are sums payable by A Limited and B Limited and not by the Trust;

(2) the Trust's only assets are (1) its shareholding (either directly or indirectly) in A Limited and B Limited and (2) the income stream derived by way of dividend (either directly or indirectly) from A Limited and B Limited.

"Trustees are entitled to be indemnified out of the capital and income of their trust fund against all obligations incurred by the Trustees in the due performance of their duties and the due exercise of their powers. The Trustees must then debit each item of expenditure either against income or against capital. The general rule is that income must bear all ordinary outgoings of a recurrent nature, such as rates and taxes, and interest on charges and encumbrances. Capital must bear all costs, charges and expenses, incurred for the benefit of the whole estate"

On this basis, albeit on the false premise that the property portfolio was an asset of the Trust, Mr Scrivener urges on me that all sums (including costs) needed to dispose of the 2015 Action should come solely from the sale of properties, even if A Limited and B Limited presently have sufficient liquid resources to pay.

(1) the mode of funding threatened the Trustee's ability to pay to the existing life tenants the annual income which they have, historically, been receiving from the Trust; or, conversely,

(2) the mode of funding causes properties in the portfolio to be sold unnecessarily. Clearly a sale of a property or properties would not be unnecessary if required in order to enable the Trustee to comply with (1).